Xylem, the Industrials sector company, was revisited by a Wall Street analyst today. Analyst Joseph C Giordano from TD Cowen maintained a Hold rating on the stock and has a $135.00 price target.
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Joseph C Giordano’s rating is based on a combination of factors, including the current performance and future outlook of Xylem. While the company has shown strong execution, particularly in terms of margins, there is a noticeable slowdown in orders and revenues, which are expected to remain flat in 2025. The municipal water spending survey indicates a positive environment in the US, but tangible evidence of order acceleration is needed to boost confidence in exceeding expectations for 2026.
Despite favorable conditions, the stock’s valuation is a concern, trading at nearly 30 times the estimated 2025 earnings and around 25 times for 2026. Although Xylem has traded at higher multiples in the past, achieving a 20% upside would require a significant re-rating and a performance that surpasses current market expectations by nearly 10%. This scenario, while possible, is not easily justifiable as a base case, leading to the Hold rating with a price target of $135, which assumes a 25 times multiple of the fiscal year 2026 earnings estimate.